Lead Opinion
This appeal from a judgment of foreclosure entered against appellants Eugene and Nancy Markgraf raises several issues regarding the Secretary of Agriculture’s duties under 7 U.S.C. § 1981a (1982). Section 1981a provides generally that the Secretary may permit deferral of repayment or may forego foreclosure on loans granted by the Farmers Home Administration (FmHA). The district court held that the Secretary was not required to implement section 1981a at all. Thus, the Secretary did not have to consider whether to defer repayment before foreclosing on FmHA loans. We affirm the entry of the judgment of foreclosure, although for reasons different from those stated by the district court.
I.
Between 1976 and 1979, the Markgrafs obtained a series of loans from the FmHA. These loans varied in purpose, amount, and terms. In May 1978, the Markgrafs began to default on their loans. The Markgrafs have not made any payments on any of their loans since March 31, 1980.
In April 1979, the FmHA district director prepared a problem case report on the Markgrafs after reviewing their account. The district director concluded that the Markgrafs’ account probably would require liquidation if they failed to repay a 1979 loan. The Markgrafs failed to repay this loan.
In March 1980, the Markgrafs discussed the status of their loans with their FmHA county supervisor and requested further financing for 1980. The supervisor told the Markgrafs that he would not recommend further financing.
By letter dated August 15, 1980, the FmHA notified the Markgrafs that it was accelerating the unpaid balance of their loans.
The district court entered summary judgment of foreclosure against the Markgrafs. The district court held that the Secretary’s authority to implement section 1981a was discretionary. Given that the Secretary did not have to implement the statute at all, the court ruled that he did not have to provide personal written notice of the availability of section 1981a or promulgate regulations embodying procedural and substantive standards to be used in applying section 1981a.
On appeal, the Markgrafs argue that the FmHA is required to implement section 1981a. They contend that Congress intended the Secretary of Agriculture’s discretion
The United States argues that section 1981a is permissive, and therefore, the Secretary does not have to implement it. The government principally relies on the fact that the statute uses the permissive term “may.” Thus, the government argues, regulations and written notice are not required. If regulations are required under section 1981a, the government maintains that existing regulations satisfy these requirements. Therefore, the United States argues, judgment of foreclosure was proper.
II.
The first issue we address is whether the Secretary of Agriculture must implement section 1981a. It is not clear under what circumstances an administrative agency properly may determine not to implement statutory powers given it by Congress. Compare Rank v. Nimmo,
We begin, as we must, with the language of the statute itself. Howe v. Smith,
In addition to any other authority that the Secretary may have to defer principal and interest and forego foreclosure, the Secretary may permit, at the request of the borrower, the deferal of principal and interest on any outstanding loan ... and may forego foreclosure of any such loan, for such period as the Secretary deems necessary upon a showing by the borrower that due to circumstances beyond the borrower’s control, the borrower is temporarily unable to continue making payments of such principal and interest when due without unduly impairing the standard of living of the borrower.
7 U.S.C. § 1981(a) (1982) (emphasis supplied). The word “may,” when used in a statute, usually gives discretion to those charged with enforcement of the statute. United States v. Rodgers,
Any inferences from the statutory language of section 1981a indicate that Congress intended the Secretary’s discretion to extend only to whether to grant relief in individual cases and not to whether to implement the statute. First, it is signif
The legislative history also indicates that Congress intended the implementation of section 1981a to be mandatory. Congress passed section 1981a as part of the Agricultural Credit Act of 1978, which amended the Consolidated Farm and Rural Development Act of 1961, 7 U.S.C. §§ 1921-1996 (1982). The House Report accompanying the House version of the 1978 Act states, “[W]e find FmHA’s present authorities are inadequate today to meet the credit needs of farmers who qualify for the Agency’s services. The purpose of this legislation is to broaden FmHA authorities to cope with today’s problems and be of greater service to farmers and the rural community.” H.R.Rep. No. 986 at 22, 95th Cong., 2d Sess., reprinted in 1978 U.S.Code Cong. & Ad.News 1106, 1127. It is difficult to understand how section 1981a can help farmers if the Secretary refuses to implement it. Where a statute is enacted to benefit a designated class of persons by allowing relief in a particular situation, we will presume in the absence of substantial evidence to the contrary that Congress intended the statute to be implemented.
Furthermore, the House Report compared section 1981a to “[c]omparable language” in the Housing Act with respect to housing loans made by the FmHA. See 42 U.S.C. § 1475 (1976). Section 1475 authorizes the Secretary of Agriculture, under regulations to be prescribed by him, to grant a deferral of repayment of loans upon the same showing required by the borrower under section 1981a. The Secretary has implemented section 1475. The express comparison indicates that Congress intended the Secretary to implement section 1981a.
Finally, the congressional debate on the 1978 Act shows an intent to make the implementation of section 1981a mandatory. During the Senate debate, Senator Eagleton stated:
I should note that the original form of my amendment gave the Secretary of Agriculture no discretion in the implementation of the loan deferral program. However, as the result of the personal assurance I have received from the Secretary of Agriculture that the loan deferral program will be carried out without interest being charged on interest, I have modified my amendment so that this deferral program will be within the Secretary’s discretionary authority. I hasten to add, however, that the prohibition on the charging of interest on interest remains mandatory for this program.
124 Cong.Rec. 12133 (1978). This comment evidences that Congress intended the Secretary to implement section 1981a.
We deem it appropriate to give some consideration to the Secretary of Agriculture’s position that section 1981a is permissive. It is a well-established maxim that courts will give substantial deference to an agency’s interpretation of a statute that it is charged with enforcing. See, e.g., United States v. Clark,
We note that in similar circumstances, courts have held that the failure to implement a statute containing precatory language was improper. In Abrams v. Hills,
On balance, the statutory language and legislative history lead us to conclude that the Secretary of Agriculture must implement section 1981a. Thus, we reject the Secretary’s interpretation of the statute as inconsistent with congressional intent. Decisions in other circuits have reached the same result. Allison v. Block,
We note that Congress is aware of the controversy as to whether the implementation of section 1981a is mandatory or discretionary. See 128 Cong.Rec. H605-06 (daily ed. March 2, 1982) (remarks of Rep. Daschle); 128 Cong.Rec. H6810 (daily ed. September 9, 1982) (passage of H.R. 5831, which would make section 1981a mandatory).
We turn next to the issue of whether the Secretary is required to promulgate regulations to implement sec
We cannot, however, dictate the process through which the Secretary must act to articulate standards. It is a fundamental principle of administrative law that the choice between rule making and adjudication is one primarily for the discretion of the agency. SEC v. Chenery Corp.,
One additional fact leads us to conclude that we cannot require the Secretary to promulgate regulations. The original House version of section 1981a authorized deferral relief “under regulations prescribed by the Secretary.” See H.Conf.Rep. No. 1344, 95th Cong., 2d Sess. 28, reprinted in 1978 U.S.Code Cong. & Ad. News 1176, 1187. The Senate version contained no reference to regulations. Congress enacted the Senate version. Id. This deletion of the express requirement of regulations, although not conclusive, indicates that Congress did not intend to mandate that the Secretary act through regulations. Thus, we conclude that we will not require the Secretary to promulgate regulations. Accord Allison v. Block,
Finally, we turn to the issue of whether the Secretary must provide FmHA borrowers with personal written notice of the availability of section 1981a relief before determining whether to accelerate or foreclose on a loan.
The general rule is that everyone is charged with notice of the contents of our federal statutes. See Federal Crop Insurance Corp. v. Merrill,
Because of the policies supporting this rule, we will not lightly infer a duty to provide notice. Where Congress wishes to alter the rule and impose a duty of providing notice, it must do so in reasonably explicit terms. See Denton v. United States,
We emphasize that we in no way preclude the Secretary from mandating, through regulation or otherwise, that the FmHA must provide borrowers with personal notice of the availability of relief under section 1981a. Indeed, we note that providing notice poses little if any administrative difficulties for the FmHA. The FmHA already sends notices to borrowers whose loans are being accelerated or foreclosed. It would be a simple matter to include notice of section 1981a. As we have stated, the purpose of the statute is to help farmers with credit problems; providing notice thus would be consistent with the congressional purpose.
We note that the FmHA has promulgated regulations requiring that FmHA borrowers receive notice of servicing options, including deferral, at the time that they make their loan application. The Fourth Circuit, in United States v. Hamrick,
III.
In summary, we hold that the Secretary is required to implement section 1981a and to articulate standards to guide the exercise of discretion under the statute. However, the Secretary is not required to provide notice to FmHA borrowers of the availability of deferral relief. Because the Markgrafs failed to request deferral relief, the Secretary was not required to consider the applicability of section 1981a in their case before accelerating and foreclosing on their loans.
The Markgrafs have raised other arguments, which we determine to be without merit.
Affirmed.
Notes
. This court may affirm a district court's conclusions even where the lower court applied the wrong reasoning or relied on incorrect grounds. Beach v. Owens-Corning Fiberglas Corp.,
. As of May 21, 1981, the unpaid principal balance of the loans was $293,109.35.
. Cf. State Highway Comm’n v. Volpe,
. We emphasize that we do not rely in any way on subsequent statements of legislators in our determination of congressional intent. Subsequent statements of legislators are not probative of the intent of the Congress that passed a statute. See United States v. Clark,
. The Fourth Circuit in United States v. Hamrick,
. We realize that this is a harsh result. However, the Supreme Court has stated that the rule that ail persons are charged with notice of statutes applies "regardless of actual knowledge ... or of the hardship resulting from innocent ignorance.” Federal Crop Insurance Corp. v. Merrill,
Dissenting Opinion
dissenting from the denial of rehearing en banc.
At a time when the very large number of federal court of appeals decisions being
As the panel opinion explains, 7 U.S.C. § 1981a authorizes the Farmers Home Administration to grant relief to farmers who owe it money, in particular relief from foreclosure. The question on which the panel differs with the only other circuits to have considered it is whether the statute creates by implication a duty to notify a farmer, before foreclosing on his farm, that he can apply for relief under the statute. The Eighth Circuit held that it does, Allison v. Block,
It is not a compelling reply to this argument that everyone is presumed to know the contents of statutes. This is a legal fiction, and for more than 200 years we have been told that the proper office of legal fictions is to prevent, rather than to create, injustices. See 3 Blackstone, Commentaries on the Laws of England 43 (1768). It would not be much consolation to a farmer whose farm had been foreclosed without his knowing about the relief he might have gotten under section 1981a that he ought to have studied the United States Code more carefully; it is the kind of response that breeds popular disrespect for law. There ought to be a better reason for turning down his claim, such as the administrative burden to the government. But there does not seem to be any such burden. All that the approach of the other circuits requires the government to do is to add a sentence to the notice of foreclosure. The panel opinion of this circuit acknowledges that the burden is slight; the government’s brief makes no contrary claim.
In rejecting the approach of the other circuits, the panel cites cases such as Federal Crop Insurance Corp. v. Merrill,
As is often true in matters of statutory interpretation, it is not certain what Congress intended. Maybe — though there is no indication of this — it wanted to minimize the expense of the program by keeping many of the intended beneficiaries in the
To repeat an earlier qualification, I am not suggesting that every time Congress passes a statute those charged with administering it must send written notice of its contents to all the intended beneficaries. The question before us is more particular than that; it is not unfairly stated as whether Congress meant to authorize the Farmers Home Administration to hide the existence of the newly enacted section 1981a by omitting from the notice of foreclosure all reference to the procedure by which the recipient of the notice might be able to prevent foreclosure. Maybe this is what Congress did mean to do but the contrary interpretation of the statute by the Eighth and Tenth Circuits is neither so clearly mistaken nor so far-reaching in its consequences that we ought to indulge our own views and reject theirs without going en banc, and by rejecting create another intercircuit conflict. Although the issue is not an earthshaking one, it is not a happy situation to have a rule that entitles farmers in the states of the Eighth and Tenth Circuits to notice of their rights under section 1981a, but not farmers in the states of the Seventh Circuit. I am not sure that even the government comes out much ahead, since now it must decide whether to send different notices in different parts of the nation. Of course whatever we do the government might decide to keep litigating the issue in the remaining circuits; but if we joined the Eighth and Tenth Circuits it might decide to throw in the towel. Indeed, I hope the government does so now, by heeding the panel’s suggestion that it comply throughout the nation with those circuits’ ruling. But it need not; and lacking confidence that it will I respectfully dissent from the decision not to hear this case before the full court.
